Malls driving retail franchise revolution in India

Heavy customer traffic, coupled with the ability to indulge shoppers in impulse buying is making malls favourite retail franchise locations in India

With many brands intending to franchise at malls, these novel retail formats are emerging as leading franchise vehicles in India. Such a trend has prompted real estate developers across the country to splurge heavily on mall development, leading to mushrooming of malls in metropolis, tier II and tier III cities.

Today, franchising is becoming a key part of growth patterns for many companies in Asia, but businesses are not too sure about malls as perfect places for a franchise set-up. A recent poll conducted by ConstructionBiz360 also represent such notions, where 67% respondents feel that malls are ideal retail franchise vehicle, while the remaining 33% chose to take a neutral stand.

According to Shubhranshu Pani, managing director (Retail Services) at JLL India, “Malls are the best places for a franchise set-up because they assure a lot of customer traffic. However, it is a mistake to assume that a high footfall rate in a mall automatically translates into increased sales for franchises. A significant number of Indian mall visitors come only to enjoy the ambience. Still, malls boost retailers’ sales because customers who had no plans of buying their products may still do on impulse there. Lifestyle brands, in particular, benefit from this factor.”

Bakery brand Monginis rose to stupendous growth, after it started franchising. Monginis currently has an extensive network of more than 500 retail and 10 manufacturing franchisees across 37 cities in India, revealed company managing director Kumail Khorakiwala.

“Malls as franchise vehicles are becoming popular in tier II and III cities than in metros as major brands prefer to first test the local market via franchisees, since hometown operators are better at capitalising on the market there,” said Saurav Ranjan Datta, marketing head (Retail and Commercial) at Shriram Ozone Group, a reputed property firm headquartered in Kolkata.

On the contrary, some do not think that malls are the perfect places for franchising due to high cost of mall space. “The cost of putting up a store inside a mall is proportional to the franchised name you have purchased,” said a franchise owner of Little Shop, an emerging kids’ wear, on conditions of anonymity.

Going ahead, as builders focus on developing new malls to feed the hunger of the expanding retail market, franchising in India will thrive and so would malls emerge as leading franchise vehicles.